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-   -   Proposed West Coast BC LNG Terminals (https://skyscraperpage.com/forum//showthread.php?t=201424)

Metro-One Sep 26, 2014 2:24 AM

Quote:

Originally Posted by MalcolmTucker (Post 6743138)
Well it makes sense.

They can produce in BC, ship to the states, and ship out via an LNG plant with massive local incentives and no extra taxes.

Why would they pay an extra tax in BC?

It sounds almost as if you want BC to fail...

MalcolmTucker Sep 26, 2014 3:38 AM

Quote:

Originally Posted by Metro-One (Post 6744077)
It sounds almost as if you want BC to fail...

No, but to achieve success BC has to have a competitive cost structure. If BC strangles the golden goose to try to get a bigger egg there may be no egg at all.

Denscity Sep 26, 2014 10:07 PM

Quote:

Originally Posted by Metro-One (Post 6744077)
It sounds almost as if you want BC to fail...

That's what I was going to say as well. Alberta doesn't want BC to succeed with LNG it seems. That's why I posted that I was starting to see negative comments coming from Alberta. Its not like its at the expense of Alberta that BC succeeds.

logan5 Sep 26, 2014 10:16 PM

These threats by Petronas indicate to me that they want to set up in BC.

Metro-One Sep 26, 2014 11:28 PM

Exactly! They are just trying to squeeze out a few extra nickels before they close the deal.

Speaking publicly about such deals is a good sign, it is when you hear nothing for months on end that you start to get worried.

craneSpotter Sep 27, 2014 12:23 AM

Quote:

Originally Posted by Denscity (Post 6745344)
That's what I was going to say as well. Alberta doesn't want BC to succeed with LNG it seems. That's why I posted that I was starting to see negative comments coming from Alberta. Its not like its at the expense of Alberta that BC succeeds.

Just sour grapes over pipelines...but LNG will benefit Alberta too. You should read their newspapers! LOL

craneSpotter Sep 27, 2014 12:37 AM

and here we go, tag round two, this time from partner Sinopec...'we need to use foreign workers!"...hmmm well at least for the positions the locals can't fill.

I guess they don't like the inflated labour rates the oil sands has established (partly why Statoil postponed construction of their large oil sands plant in Alberta for three years yesterday).

The ball is being put just as much in the feds court as BC's.

Labour shortage imperils LNG projects, Chinese partner warns
http://www.theglobeandmail.com/repor...ticle20815508/

Quote:

Canada needs to open its oil and gas industry to skilled workers from China and elsewhere to address a labour crunch, says the Chinese partner of the Petronas-led consortium planning a liquefied natural gas export project in British Columbia.

Without policy concessions from the Canadian government, “many projects will drop,” said Feng Zhiqiang, executive vice-president of Sinopec International Petroleum Exploration and Production Co., a subsidiary of the Chinese oil and gas giant...

...The B.C. Ministry of Natural Gas Development said Friday that its top priority is to ensure British Columbians are first in line for LNG jobs. “Some jobs will not be filled by British Columbians, either because they require highly specialized experience in the LNG industry or because we do not have enough workers in the province to meet the level of demand,” the ministry said. “Our priority in filling those jobs includes making sure British Columbians are first in line for job opportunities, then Canadian workers, followed by U.S. and international workers.”

Jason Kenney, the federal Minister of Employment and Social Development, has said Ottawa expects LNG developers to use Canadian labour, resorting to temporary foreign workers only rarely to meet specific needs.
I support the use of foreign workers, there is no way BC and Canada can supply all of them.

jawagord Sep 27, 2014 2:24 AM

Quote:

Originally Posted by Denscity (Post 6745344)
That's what I was going to say as well. Alberta doesn't want BC to succeed with LNG it seems. That's why I posted that I was starting to see negative comments coming from Alberta. Its not like its at the expense of Alberta that BC succeeds.

Alberta wants BC to put policies in place that support the oil and gas industry but BC opposes oil pipelines and can't get it's shit together on gas. Christie Clark has done an Ed Stelmach, she's campaigned on huge NGL gas tax but won't be able to deliver it, as none of the companies will build a plant and pay extra LNG taxes and carbon taxes on top of business tax and gas royalties. It's frustrating that the future of Canada's oil and gas industry is being hamstrung by BC's greed and hubris.

Stingray2004 Sep 27, 2014 5:39 PM

Quote:

Originally Posted by jawagord (Post 6745590)
Alberta wants BC to put policies in place that support the oil and gas industry but BC opposes oil pipelines and can't get it's shit together on gas. Christie Clark has done an Ed Stelmach, she's campaigned on huge NGL gas tax but won't be able to deliver it, as none of the companies will build a plant and pay extra LNG taxes and carbon taxes on top of business tax and gas royalties. It's frustrating that the future of Canada's oil and gas industry is being hamstrung by BC's greed and hubris.

Gotta disagree. And here's why...

Petronas LNG Upstream, for example:

1. Substantial holdings in NE BC Montney Basin;

2. Montney Basin is "Liquids Rich". IOW, propane, butane, naptha, etc. flow from the same natural gas wells, which are basically sold at a price of barrel of oil;

3. The "liquids" basically pay for the cost of well drilling, etc. and the dry gas (input for LNG) is essentially free; No other global LNG operator has that cost advantage AFAIK;

4. Per well drilling costs in the Montney basin are the lowest in North America based upon some studies that I have seen;

5. Flow rates per well are also close to the highest in NA;

6. Depletion rates per well are also some of the best in NA;

7. NG royalty rates/tax credits in BC are just as competitive as AB;

Petronas LNG Mid-stream/Down-stream:

1. Trans-Canada Pipelines' $5 billion NG pipeline from NE BC Montney Basin to the coast will require Petronas to pay tolling charges to transmit the NG to the coast. However, as the head of global BG Group's LNG unit has previously stated, the cool annual ambient temperature on BC's NW coast basically "pays" for those tolling/transmission costs.

IOW, the cool ambient temperature on NW BC's coast requires only ~30% of the energy to liquefy the NG to LNG compared to the "tropical" climes of Australia and the U.S. Gulf coast; (Think of a refrigerator running 24/7 outside in hot temps.)

Australia's capex per million ton capacity of installed LNG is basically 2 - 3 times that projected for BC's nascent LNG industry. Massive cost-blow-outs as well. Plus militant unions to boot. Also curious to note that Australia LNG major Woodside Petroleum already has a site selected on BC's NW coast as a result.

Remember that shipping costs are also a major component of landed LNG. And shipping time from NW BC to Tokyo Harbour is the same as from eastern Australia.

And then we look at the proposed BC taxation regime/fiscal framework for proposed LNG. Basically same royalty regime as AB. In any event, chartered accounting firm Ernst & Young released a report earlier this year looking at aggregate taxes and royalties over a 20-year period comparing several jurisdictions. Inclusive of BC's proposed "LNG tax", BC still competitively out-performs Australia, and the U.S. states of Alaska, Louisiana, Oregon, and Texas.

And finally, basically all of BC's FN's have "bought" into these LNG facilities and have equity interests. From the Haisla FN in Kitimat, to the Tsimshian FN in Prince Rupert to FN's eastward.

Again, Petronas' proposed LNG facility is still a 99% go from what I am hearing on the ground. In fact, the same Petronas CEO Shamsul Abbas will be meeting with BC's ministers in BC next week. Relationships established have been very professional and quite cordial. Have never seen the BC gov't as pro-active, behind the scenes, on the LNG file over the past 2 years compared to any other file.

The key regarding LNG facilities moving forward are long-term contracts at a price beneficial to both counter parties. And that they have.

Stingray2004 Sep 27, 2014 5:40 PM

Quote:

Originally Posted by jawagord (Post 6745590)
Alberta wants BC to put policies in place that support the oil and gas industry but BC opposes oil pipelines and can't get it's shit together on gas. Christie Clark has done an Ed Stelmach, she's campaigned on huge NGL gas tax but won't be able to deliver it, as none of the companies will build a plant and pay extra LNG taxes and carbon taxes on top of business tax and gas royalties. It's frustrating that the future of Canada's oil and gas industry is being hamstrung by BC's greed and hubris.

Now changing subject. I fully support AB having access for its oil to tidewater port on Canada's west coast to access markets other than the U.S. Period.

As for the proposed Northern Gateway Pipeline, the big problem is FN's. Remember that NE BC (where the natural gas basins are situate) is covered by Treaty 8 from 1899, the same Treaty 8 that covers the northern half of AB inclusive of the oil sands in Fort Mac. Only the southern part of Vancouver Island is also covered by the Douglas Treaties from the same era along with some recent smaller BC treaties.

That complicates things esp. on a project such as the "greenfield" Northern Gateway Pipeline through northern BC. Enbridge fricked up that file from the get go, quite frankly. With not establishing proper FN relationships/trust from the beginning, FNs along the route became vehemently opposed to same. The same Haisla FNs et al that support LNG.

FNs up there are concerned about potential leaks along the thousands of river crossings of salmon-bearing streams. And potential oil tanker spills along the coast damaging fishing/tourism, etc. They view same as taking all the risk with not material benefit.

And scenes of Enbridge's Kalamazoo calamity along with Exxon Valdez don't help any. Remember that we are talking bitumen here (which apparently sinks and is very difficult to clean up) compared to synthetic crude. Emotion and fear then sets in.

While the NEB gave Northern Gateway approval subject to 209 conditions, many of those conditions require FN consent. And I don't see that happening now. Even Jim Prentice met with FNs along the NGP route within the past year to converse and assess their concerns.

BTW, just last week Premier Jim Prentice had several interviews with the media about Northern Gateway. And when Prentice basically stated that the NGP terminus at Kitimat (with the Douglas Channel) was the wrong locale due to tremendous FN opposition, Prentice basically threw the entire project under the proverbial bus.

Based upon numerous opinion polls over the past few years, BC is basically split down the middle on Northern Gateway. And some opposed are only "moderately" opposed. Roughly 28% of BCers have always been "strongly' opposed to NGP. Again, it's the northern BC FNs that are consequential.

As for the other proposal by Kinder Morgan, on it's twinning of the existing Trans-Mountain pipeline to the SW coast, that is a "brownfield" project and has seen considerably less opposition. The pipeline has already been previously twinned through sensitive Jasper National Park and Mount Robson Provincial Park on the BC side along with some twinning north of Kamloops.

Sure some opposition also exists from the hardcore enviro crowd on the SW BC coast but that is a moot point. A spokesperson for Kinder Morgan's proposed twinning was on the local 6 pm news a few weeks ago. According to her, all BC FNs along the route, except one, has already signed on as equity participants. Again, FNs are key to oil/bitumen new pipelines to the west coast.

And I suspect, at the end of the day, Kinder Morgan's twinning will not only be green-lighted but will also proceed to construction phase.

jawagord Sep 28, 2014 3:30 PM

Quote:

Originally Posted by Stingray2004 (Post 6746038)
Now changing subject. I fully support AB having access for its oil to tidewater port on Canada's west coast to access markets other than the U.S. Period.

As for the proposed Northern Gateway Pipeline, the big problem is FN's. Remember that NE BC (where the natural gas basins are situate) is covered by Treaty 8 from 1899, the same Treaty 8 that covers the northern half of AB inclusive of the oil sands in Fort Mac. Only the southern part of Vancouver Island is also covered by the Douglas Treaties from the same era along with some recent smaller BC treaties.

That complicates things esp. on a project such as the "greenfield" Northern Gateway Pipeline through northern BC. Enbridge fricked up that file from the get go, quite frankly. With not establishing proper FN relationships/trust from the beginning, FNs along the route became vehemently opposed to same. The same Haisla FNs et al that support LNG.

FNs up there are concerned about potential leaks along the thousands of river crossings of salmon-bearing streams. And potential oil tanker spills along the coast damaging fishing/tourism, etc. They view same as taking all the risk with not material benefit.

And scenes of Enbridge's Kalamazoo calamity along with Exxon Valdez don't help any. Remember that we are talking bitumen here (which apparently sinks and is very difficult to clean up) compared to synthetic crude. Emotion and fear then sets in.

While the NEB gave Northern Gateway approval subject to 209 conditions, many of those conditions require FN consent. And I don't see that happening now. Even Jim Prentice met with FNs along the NGP route within the past year to converse and assess their concerns.

BTW, just last week Premier Jim Prentice had several interviews with the media about Northern Gateway. And when Prentice basically stated that the NGP terminus at Kitimat (with the Douglas Channel) was the wrong locale due to tremendous FN opposition, Prentice basically threw the entire project under the proverbial bus.

Based upon numerous opinion polls over the past few years, BC is basically split down the middle on Northern Gateway. And some opposed are only "moderately" opposed. Roughly 28% of BCers have always been "strongly' opposed to NGP. Again, it's the northern BC FNs that are consequential.

As for the other proposal by Kinder Morgan, on it's twinning of the existing Trans-Mountain pipeline to the SW coast, that is a "brownfield" project and has seen considerably less opposition. The pipeline has already been previously twinned through sensitive Jasper National Park and Mount Robson Provincial Park on the BC side along with some twinning north of Kamloops.

Sure some opposition also exists from the hardcore enviro crowd on the SW BC coast but that is a moot point. A spokesperson for Kinder Morgan's proposed twinning was on the local 6 pm news a few weeks ago. According to her, all BC FNs along the route, except one, has already signed on as equity participants. Again, FNs are key to oil/bitumen new pipelines to the west coast.

And I suspect, at the end of the day, Kinder Morgan's twinning will not only be green-lighted but will also proceed to construction phase.

There are something like 45 FN groups along the NG route and to expect all of them to agree to the pipeline is unrealistic when many are using their opposition to the pipeline as a tool to leverage the Federal and BC governments on land claims. Enbridge claims they have equity agreements with more than 60% of the groups. This is business as usual, at the end of the day (after next years elections) the Federal government will need to decide if they are going to intervene to get the line built as some FN groups will never agree. On the other hand The BC governments (provincial and local) went from being early supporters (city of kitimat lobbied for the NG pipeline) to interveners opposed to the pipeline due in large part To Christie Clarkes 5 conditions election scheme. Since then BC government lawyers have opposed the NG pipeline at NEB hearings and have elevated the fear-mongering to unprecedented levels that has created a poisoned environment for all oil pipelines. Now we have the city of Burnaby filing court injunctions to stop KM survey crews. The idiot mayor of Vancouver publicly opposes KM expansion, the town of Kitimat has voted against NG, job well done BC. Now the province is screwing up the LNG side with tax demands and changing environmental rules - the window to get these big projects built is starting to close and BC's advantages won't matter if the LNG market is locked up by other countries. http://www.globallnginfo.com/world%2...0terminals.pdf

Stingray2004 Sep 29, 2014 4:46 AM

Quote:

Originally Posted by jawagord (Post 6746747)
There are something like 45 FN groups along the NG route and to expect all of them to agree to the pipeline is unrealistic when many are using their opposition to the pipeline as a tool to leverage the Federal and BC governments on land claims. Enbridge claims they have equity agreements with more than 60% of the groups. This is business as usual, at the end of the day (after next years elections) the Federal government will need to decide if they are going to intervene to get the line built as some FN groups will never agree.

On the other hand The BC governments (provincial and local) went from being early supporters (city of kitimat lobbied for the NG pipeline) to interveners opposed to the pipeline due in large part To Christie Clarkes 5 conditions election scheme. Since then BC government lawyers have opposed the NG pipeline at NEB hearings and have elevated the fear-mongering to unprecedented levels that has created a poisoned environment for all oil pipelines.

Now we have the city of Burnaby filing court injunctions to stop KM survey crews. The idiot mayor of Vancouver publicly opposes KM expansion, the town of Kitimat has voted against NG, job well done BC. Now the province is screwing up the LNG side with tax demands and changing environmental rules - the window to get these big projects built is starting to close and BC's advantages won't matter if the LNG market is locked up by other countries. http://www.globallnginfo.com/world%2...0terminals.pdf

Again. Gotta disagree. And in that vein, AB politics (both FN and otherwise) is different from BC. And again, both AB and BC have different sub-regional political groupings in that regard.

Firstly, to re-iterate, NGP in AB passes through Treaty 8 lands dating back to circa 1899. Apparently, most, if not all, FNs in AB have signed agreements with Enbridge. Treaty 8 also extends into NE BC covering all over BC`s Peace River country where BC`s natural gas basins are situate.

West of there in BC, none of the FNs are covered by treaty. Furthermore, NOT ONE FN has signed onto NGP - unlike AB FNs from Bruderheim westward.

And those FNs are not attempting to leverage land claims as you suggest. In that vein, most (if not all) BC FNs along the same route are on board for the numerous NG pipelines to the west coast along with the westcoast LNG terminals. Ergo, your hypothesis fails there.

Again, FNs have an emotional fear of a bitumen spill along the numerous thousands of NGP river crossings with the potential for bitumen spills along same with salmon habitat. And more importantly, west coast FN fisheries and tourism may potentially be impacted by an Exxon Valdez-type disaster. That`s not my opinion. That`s their viewpoint.

Enbridge, when they commenced their process, viewed BC as akin to AB politically and that was an improper approach dealing with these FN and BC political sensitivities.

Jim Prentice himself said the same to the media this past week. He fully understands the FN problems with NGP moving forward. And I will also suggest that he will be a great preem for AB having that analytical knowledge - unlike his predecessors.

Remember, it was the same Jim Prentice, as federal environment minister, that rejected the large proposed Prosperity Mine west of Williams Lake (in BC`s Chilcotin region) to the consternation of local authorities, local Con MPs, residents and the BC government. In fact, BC had already provided the environmental assessment certificate for the proposed Prosperity Mine. That matter, today, is subject to a Judicial Review.

And the feds will not step in on behalf of Enbridge at the end of the day either. Forget about it. Too much political heat for them.

BTW, I personally support the NGP. As for BC`s `5 conditions`, I support them as well. In fact, when one reviews same individually, not that much to ask for considering the inherent risk - both risk-wise and political. And they can be easily satisfied. It`s the FN condition that needs to be met. And Enbridge screwed up same royally at the get-go, based upon previous interviews with former Enbridge employees in the media.

Even AB preem Jim Prentice `get`s that`. In fact, wouldn`t put too much weight on the BC gov`t acting as an intervenor in the NGP hearings either. Trends toward the political angle and the `5 conditions` more than anything else.

Also remember that BC has the lowest personal and corp. tax regime in the country aside from AB. And it also has the most pro-economic and resource development gov`t in the country along-side both AB and SK.

As for Kinder Morgan`s proposed tunnel under Burnaby Mountain, the NEB has given them approval for surveying same. They are legally entitled to that.

Problem was that they cut down some old-growth trees while undertaking same. And that was in contravention of the City of Burnaby`s by-laws. More importantly, the mature trees were within the Burnaby Mountain Conservation Area. KM should have been more sensitive to same. But they are still green-lighted to be `less intrusive` in surveying same.

As for Kitimat and its non-binding plebiscite, doesn`t mean much. Kitimat is currently undergoing a boom with the $3 billion+ Alcan aluminum smelter expansion, Chevron LNG work camp, Shell LNG, etc. Housing prices rising through the roof, zero vacancy, etc. probably caused some to vote no as too much development already on their plate.

Again, AB Premier Jim Prentice last week told the media that, based upon his FN discussions, Kitimat was the wrong locale for the NGP terminus. It is what it is.

As for Burnaby mayor Derek Corrigan, he is a hard-core NDP-type and so is his 8-member NDP slate of BCA councillors who all oppose the KM twinning to boot. Don`t fret over them. They are inconsequential. They still, however, will be re-elected this November due to the low-20% municipal turnout in Burnaby muni elections.

Frankly, don`t concern yourself with the Van City mayor Gregor Robertson publicly opposing the KM expansion either. The pipeline does not run through Van City. Even the the KM terminus is not extant at Van City`s border. Gregor, who is basically a green liberal, has been mocked in the media about discussing that matter and other matters outta his jurisdiction. KM, at Burrard Inlet, is within the jurisdiction of the federal Port of Vancouver. Different entity completely.

And frankly, based upon a myriad of other reasons, it appears that Gregor will be ousted in this November`s muni election to the centre-right`s NPA mayoral candidate Kirk LaPointe.

Bottom line - NGP is likely dead in its present configuration BUT KM is likely a go at the end of the day.

Now back to LNG. BC has roughly 18 LNG proposals on the books. Many of those are from promoters with no LNG expertise, no deep financial pockets, etc. and they are dead from the get-go.

However, most other BC LNG proposals have global LNG majors as proponents with their expertise, buyer contacts, and deep pockets.

Also remember that roughly 150 million tons per annum of un-contracted LNG demand in Asia exists by 2025. And LNG purchasers are also risk averse. To wit:

1. Qatar is the world`s current largest LNG producer (and will not expand capacity), very reliable, yet most of its LNG product traverses the narrow Strait of Hormuz neighbouring Iran. Geo-political risk is in the background thereto esp. when one considers that Japan, for example, only has 2 - 3 days of LNG on hand at any given time;

2. Australia will now surpass Qatar as the world`s largest LNG producer yet its capex cost per million tons per annum of installed LNG capacity has skyrocketed beyond current economic viability. Is it any wonder why major Australian LNG producer Woodside Petroleum seems to have abandoned Australia for future greenfield LNG such as their proposed Aussie Browse LNG? And now has selected a NW BC site for an LNG terminal?

Or why future `brownfield` LNG in Australia - that is, addition of liquefaction trains to existing Aussie LNG terminals - has also been abandoned by all other LNG global players in Australia?

3. Africa is an LNG producer yet much of Africa does not have any infrastructure, regulatory and legal framework (Tanzania and Mozambique), unskilled workforce, and is quite corrupt frankly. $Billions must be spent within unstable African regimes. Would you?

BG Group now does not have the NG feed-stock for its Egyptian LNG terminal. They are losing their shirts on that project.

Other global LNG giants in Africa continuously declare force majeure due to pipeline bombings, etc. Another witnessed an embargo of LNG tankers due to basically blackmail, for a week, for roughly $1 billion by a Nigerian Port Authority even when the national gov`t oil company was part of the LNG consortium and that payment was not required.

Another recently opened LNG terminal in Africa now needs to be shut-down for one year due to shoddy workmanship through-out its entire system.

And that leaves us with the U.S Gulf Coast. Over one year ago, the head of Petronas told the Globe and Mail newspaper that LNG sourced from BC would be much cheaper. Seems he was right. Many Asian LNG purchasers, inclusive of the Japanese, of U.S Gulf coast LNG supplies seem to have now come to the same conclusion as Petronas. They are now backing off and attempting to sub-contract thier long-term LNG supplies to third parties.

Why? Well they also initially thought that U.S. Gulf Coast LNG supplies were the cheapest in the world and would be the proverbial `Cat`s Meow`. Not so now. Unlike the BC and Australian integrated LNG model with global LNG giants, U.S. Gulf Coast LNG terminals are not operated by global LNG giants, have expensive hedge fund financing, and utilize the `tolling` LNG model.

The tolling LNG model, from an LNG purchaser`s veiwpoint, can be quite risky. Why? Because they are tied to the Henry Hub NG price and Henry Hub spiked last winter to roughly $6+ MMBTu. Much more above that and U.S. Gulf Coast begins to become cost uncompetitive v BC. BTW, Henry Hub spiked to $13 MMBtu during Hurricane Katrina.

Add on to that, LNG purchaser`s requirement to charter LNG tankers to pick-up same from the U.S. Gulf Coast, a large Panama Canal fee, new Panama Canal unable to handle larger Q-Flex and Q-Max LNG tankers, 10 days+ additional sailing time and cost to Asia compared to BC, 5% LNG burn-off during said transit... and you get the picture.

Also remember that LNG purchasers prefer the most stable and risk-free LNG seller at the end of the day. They also want diversity of supply to further reduce risk. So, jawagord, based upon the foregoing, as a potential risk-averse Asian LNG purchaser, would you purchase from Qatar? Australia? Africa? U.S Gulf Coast? or BC? (Might as well forget about Russia for a whole host of other reasons altogether)

PS. By the looks of it, the global LNG majors seem to have placed their bets on BC.

MalcolmTucker Sep 29, 2014 2:53 PM

Quote:

based upon the foregoing, as a potential risk-averse Asian LNG purchaser, would you purchase from Qatar? Australia? Africa? U.S Gulf Coast? or BC?
If BC charges royalties at the AECO price, and no extra special tax, probably BC (though there is still problems with pipelines that will need to be litigated), but if BC charges royalties/extra taxes to reflect a Henry Hub or base Brent prices, then sorry.

240glt Sep 29, 2014 4:54 PM

Quote:

Again. Gotta disagree. And in that vein, AB politics (both FN and otherwise) is different from BC. And again, both AB and BC have different sub-regional political groupings in that regard.
I think a lot of folks in Alberta do not realize this.

You look at the media in BC compared to Alberta, and it's quite clear that we're not gettting the full story here. There's a lot of misinformation and a general lack of comprehension regarding the issues and challenges in BC. Those issues don't come to light here.. our media does not seem to be driven to report that

craneSpotter Sep 29, 2014 10:26 PM

Quote:

Originally Posted by Stingray2004 (Post 6747362)
Again. Gotta disagree. And in that vein, AB politics (both FN and otherwise) is different from BC. And again, both AB and BC have different sub-regional political groupings in that regard.

Firstly, to re-iterate, NGP in AB passes through Treaty 8 lands dating back to circa 1899. Apparently, most, if not all, FNs in AB have signed agreements with Enbridge. Treaty 8 also extends into NE BC covering all over BC`s Peace River country where BC`s natural gas basins are situate.

West of there in BC, none of the FNs are covered by treaty. Furthermore, NOT ONE FN has signed onto NGP - unlike AB FNs from Bruderheim westward.

And those FNs are not attempting to leverage land claims as you suggest. In that vein, most (if not all) BC FNs along the same route are on board for the numerous NG pipelines to the west coast along with the westcoast LNG terminals. Ergo, your hypothesis fails there.

Again, FNs have an emotional fear of a bitumen spill along the numerous thousands of NGP river crossings with the potential for bitumen spills along same with salmon habitat. And more importantly, west coast FN fisheries and tourism may potentially be impacted by an Exxon Valdez-type disaster. That`s not my opinion. That`s their viewpoint.

Enbridge, when they commenced their process, viewed BC as akin to AB politically and that was an improper approach dealing with these FN and BC political sensitivities.

Jim Prentice himself said the same to the media this past week. He fully understands the FN problems with NGP moving forward. And I will also suggest that he will be a great preem for AB having that analytical knowledge - unlike his predecessors.

Remember, it was the same Jim Prentice, as federal environment minister, that rejected the large proposed Prosperity Mine west of Williams Lake (in BC`s Chilcotin region) to the consternation of local authorities, local Con MPs, residents and the BC government. In fact, BC had already provided the environmental assessment certificate for the proposed Prosperity Mine. That matter, today, is subject to a Judicial Review.

And the feds will not step in on behalf of Enbridge at the end of the day either. Forget about it. Too much political heat for them.

BTW, I personally support the NGP. As for BC`s `5 conditions`, I support them as well. In fact, when one reviews same individually, not that much to ask for considering the inherent risk - both risk-wise and political. And they can be easily satisfied. It`s the FN condition that needs to be met. And Enbridge screwed up same royally at the get-go, based upon previous interviews with former Enbridge employees in the media.

Even AB preem Jim Prentice `get`s that`. In fact, wouldn`t put too much weight on the BC gov`t acting as an intervenor in the NGP hearings either. Trends toward the political angle and the `5 conditions` more than anything else.

Also remember that BC has the lowest personal and corp. tax regime in the country aside from AB. And it also has the most pro-economic and resource development gov`t in the country along-side both AB and SK.

As for Kinder Morgan`s proposed tunnel under Burnaby Mountain, the NEB has given them approval for surveying same. They are legally entitled to that.

Problem was that they cut down some old-growth trees while undertaking same. And that was in contravention of the City of Burnaby`s by-laws. More importantly, the mature trees were within the Burnaby Mountain Conservation Area. KM should have been more sensitive to same. But they are still green-lighted to be `less intrusive` in surveying same.

As for Kitimat and its non-binding plebiscite, doesn`t mean much. Kitimat is currently undergoing a boom with the $3 billion+ Alcan aluminum smelter expansion, Chevron LNG work camp, Shell LNG, etc. Housing prices rising through the roof, zero vacancy, etc. probably caused some to vote no as too much development already on their plate.

Again, AB Premier Jim Prentice last week told the media that, based upon his FN discussions, Kitimat was the wrong locale for the NGP terminus. It is what it is.

As for Burnaby mayor Derek Corrigan, he is a hard-core NDP-type and so is his 8-member NDP slate of BCA councillors who all oppose the KM twinning to boot. Don`t fret over them. They are inconsequential. They still, however, will be re-elected this November due to the low-20% municipal turnout in Burnaby muni elections.

Frankly, don`t concern yourself with the Van City mayor Gregor Robertson publicly opposing the KM expansion either. The pipeline does not run through Van City. Even the the KM terminus is not extant at Van City`s border. Gregor, who is basically a green liberal, has been mocked in the media about discussing that matter and other matters outta his jurisdiction. KM, at Burrard Inlet, is within the jurisdiction of the federal Port of Vancouver. Different entity completely.

And frankly, based upon a myriad of other reasons, it appears that Gregor will be ousted in this November`s muni election to the centre-right`s NPA mayoral candidate Kirk LaPointe.

Bottom line - NGP is likely dead in its present configuration BUT KM is likely a go at the end of the day.

Now back to LNG. BC has roughly 18 LNG proposals on the books. Many of those are from promoters with no LNG expertise, no deep financial pockets, etc. and they are dead from the get-go.

However, most other BC LNG proposals have global LNG majors as proponents with their expertise, buyer contacts, and deep pockets.

Also remember that roughly 150 million tons per annum of un-contracted LNG demand in Asia exists by 2025. And LNG purchasers are also risk averse. To wit:

1. Qatar is the world`s current largest LNG producer (and will not expand capacity), very reliable, yet most of its LNG product traverses the narrow Strait of Hormuz neighbouring Iran. Geo-political risk is in the background thereto esp. when one considers that Japan, for example, only has 2 - 3 days of LNG on hand at any given time;

2. Australia will now surpass Qatar as the world`s largest LNG producer yet its capex cost per million tons per annum of installed LNG capacity has skyrocketed beyond current economic viability. Is it any wonder why major Australian LNG producer Woodside Petroleum seems to have abandoned Australia for future greenfield LNG such as their proposed Aussie Browse LNG? And now has selected a NW BC site for an LNG terminal?

Or why future `brownfield` LNG in Australia - that is, addition of liquefaction trains to existing Aussie LNG terminals - has also been abandoned by all other LNG global players in Australia?

3. Africa is an LNG producer yet much of Africa does not have any infrastructure, regulatory and legal framework (Tanzania and Mozambique), unskilled workforce, and is quite corrupt frankly. $Billions must be spent within unstable African regimes. Would you?

BG Group now does not have the NG feed-stock for its Egyptian LNG terminal. They are losing their shirts on that project.

Other global LNG giants in Africa continuously declare force majeure due to pipeline bombings, etc. Another witnessed an embargo of LNG tankers due to basically blackmail, for a week, for roughly $1 billion by a Nigerian Port Authority even when the national gov`t oil company was part of the LNG consortium and that payment was not required.

Another recently opened LNG terminal in Africa now needs to be shut-down for one year due to shoddy workmanship through-out its entire system.

And that leaves us with the U.S Gulf Coast. Over one year ago, the head of Petronas told the Globe and Mail newspaper that LNG sourced from BC would be much cheaper. Seems he was right. Many Asian LNG purchasers, inclusive of the Japanese, of U.S Gulf coast LNG supplies seem to have now come to the same conclusion as Petronas. They are now backing off and attempting to sub-contract thier long-term LNG supplies to third parties.

Why? Well they also initially thought that U.S. Gulf Coast LNG supplies were the cheapest in the world and would be the proverbial `Cat`s Meow`. Not so now. Unlike the BC and Australian integrated LNG model with global LNG giants, U.S. Gulf Coast LNG terminals are not operated by global LNG giants, have expensive hedge fund financing, and utilize the `tolling` LNG model.

The tolling LNG model, from an LNG purchaser`s veiwpoint, can be quite risky. Why? Because they are tied to the Henry Hub NG price and Henry Hub spiked last winter to roughly $6+ MMBTu. Much more above that and U.S. Gulf Coast begins to become cost uncompetitive v BC. BTW, Henry Hub spiked to $13 MMBtu during Hurricane Katrina.

Add on to that, LNG purchaser`s requirement to charter LNG tankers to pick-up same from the U.S. Gulf Coast, a large Panama Canal fee, new Panama Canal unable to handle larger Q-Flex and Q-Max LNG tankers, 10 days+ additional sailing time and cost to Asia compared to BC, 5% LNG burn-off during said transit... and you get the picture.

Also remember that LNG purchasers prefer the most stable and risk-free LNG seller at the end of the day. They also want diversity of supply to further reduce risk. So, jawagord, based upon the foregoing, as a potential risk-averse Asian LNG purchaser, would you purchase from Qatar? Australia? Africa? U.S Gulf Coast? or BC? (Might as well forget about Russia for a whole host of other reasons altogether)

PS. By the looks of it, the global LNG majors seem to have placed their bets on BC.

Excellent information & analysis!

Not to mention that while Japan is the largest LNG buyer in the world right now (35% of global production), China is set to triple it's LNG imports by 2020. Also, after 2020 Japan will need to decide whether to import significantly more LNG or build new nuclear reactors as many of their nuclear plants start to approach end of life. The Japanese are betting, right now, that the NG pipeline deal and pricing between Russia and China will help put downward pressure on current Asian LNG prices to the tune of $1-2 MMbtu (China/Russia future deals will set regional base price), which would still leave the proposed BC LNG operations looking good. Also, most Asian buyers are looking to diversify their LNG supply, and Canada is seen as an extremely safe, stable bet.

Of course, I expect BC & Canada to unveil a globally competitive incentive/tax package for the industry this October. This is new ground for us, so we need to seek many answers form outside as there is little, to no expertise in Canada with regard to LNG production and it's market.

jawagord Sep 30, 2014 12:29 AM

Quote:

Originally Posted by Stingray2004 (Post 6747362)
Again. Gotta disagree. And in that vein, AB politics (both FN and otherwise) is different from BC. And again, both AB and BC have different sub-regional political groupings in that regard.

Firstly, to re-iterate, NGP in AB passes through Treaty 8 lands dating back to circa 1899. Apparently, most, if not all, FNs in AB have signed agreements with Enbridge. Treaty 8 also extends into NE BC covering all over BC`s Peace River country where BC`s natural gas basins are situate.

West of there in BC, none of the FNs are covered by treaty. Furthermore, NOT ONE FN has signed onto NGP - unlike AB FNs from Bruderheim westward.

And those FNs are not attempting to leverage land claims as you suggest. In that vein, most (if not all) BC FNs along the same route are on board for the numerous NG pipelines to the west coast along with the westcoast LNG terminals. Ergo, your hypothesis fails there.

Again, FNs have an emotional fear of a bitumen spill along the numerous thousands of NGP river crossings with the potential for bitumen spills along same with salmon habitat. And more importantly, west coast FN fisheries and tourism may potentially be impacted by an Exxon Valdez-type disaster. That`s not my opinion. That`s their viewpoint.

Enbridge, when they commenced their process, viewed BC as akin to AB politically and that was an improper approach dealing with these FN and BC political sensitivities.

Jim Prentice himself said the same to the media this past week. He fully understands the FN problems with NGP moving forward. And I will also suggest that he will be a great preem for AB having that analytical knowledge - unlike his predecessors.

Remember, it was the same Jim Prentice, as federal environment minister, that rejected the large proposed Prosperity Mine west of Williams Lake (in BC`s Chilcotin region) to the consternation of local authorities, local Con MPs, residents and the BC government. In fact, BC had already provided the environmental assessment certificate for the proposed Prosperity Mine. That matter, today, is subject to a Judicial Review.

And the feds will not step in on behalf of Enbridge at the end of the day either. Forget about it. Too much political heat for them.

BTW, I personally support the NGP. As for BC`s `5 conditions`, I support them as well. In fact, when one reviews same individually, not that much to ask for considering the inherent risk - both risk-wise and political. And they can be easily satisfied. It`s the FN condition that needs to be met. And Enbridge screwed up same royally at the get-go, based upon previous interviews with former Enbridge employees in the media.

Even AB preem Jim Prentice `get`s that`. In fact, wouldn`t put too much weight on the BC gov`t acting as an intervenor in the NGP hearings either. Trends toward the political angle and the `5 conditions` more than anything else.

Also remember that BC has the lowest personal and corp. tax regime in the country aside from AB. And it also has the most pro-economic and resource development gov`t in the country along-side both AB and SK.

As for Kinder Morgan`s proposed tunnel under Burnaby Mountain, the NEB has given them approval for surveying same. They are legally entitled to that.

Problem was that they cut down some old-growth trees while undertaking same. And that was in contravention of the City of Burnaby`s by-laws. More importantly, the mature trees were within the Burnaby Mountain Conservation Area. KM should have been more sensitive to same. But they are still green-lighted to be `less intrusive` in surveying same.

As for Kitimat and its non-binding plebiscite, doesn`t mean much. Kitimat is currently undergoing a boom with the $3 billion+ Alcan aluminum smelter expansion, Chevron LNG work camp, Shell LNG, etc. Housing prices rising through the roof, zero vacancy, etc. probably caused some to vote no as too much development already on their plate.

Again, AB Premier Jim Prentice last week told the media that, based upon his FN discussions, Kitimat was the wrong locale for the NGP terminus. It is what it is.

As for Burnaby mayor Derek Corrigan, he is a hard-core NDP-type and so is his 8-member NDP slate of BCA councillors who all oppose the KM twinning to boot. Don`t fret over them. They are inconsequential. They still, however, will be re-elected this November due to the low-20% municipal turnout in Burnaby muni elections.

Frankly, don`t concern yourself with the Van City mayor Gregor Robertson publicly opposing the KM expansion either. The pipeline does not run through Van City. Even the the KM terminus is not extant at Van City`s border. Gregor, who is basically a green liberal, has been mocked in the media about discussing that matter and other matters outta his jurisdiction. KM, at Burrard Inlet, is within the jurisdiction of the federal Port of Vancouver. Different entity completely.

And frankly, based upon a myriad of other reasons, it appears that Gregor will be ousted in this November`s muni election to the centre-right`s NPA mayoral candidate Kirk LaPointe.

Bottom line - NGP is likely dead in its present configuration BUT KM is likely a go at the end of the day.

Now back to LNG. BC has roughly 18 LNG proposals on the books. Many of those are from promoters with no LNG expertise, no deep financial pockets, etc. and they are dead from the get-go.

However, most other BC LNG proposals have global LNG majors as proponents with their expertise, buyer contacts, and deep pockets.

Also remember that roughly 150 million tons per annum of un-contracted LNG demand in Asia exists by 2025. And LNG purchasers are also risk averse. To wit:

1. Qatar is the world`s current largest LNG producer (and will not expand capacity), very reliable, yet most of its LNG product traverses the narrow Strait of Hormuz neighbouring Iran. Geo-political risk is in the background thereto esp. when one considers that Japan, for example, only has 2 - 3 days of LNG on hand at any given time;

2. Australia will now surpass Qatar as the world`s largest LNG producer yet its capex cost per million tons per annum of installed LNG capacity has skyrocketed beyond current economic viability. Is it any wonder why major Australian LNG producer Woodside Petroleum seems to have abandoned Australia for future greenfield LNG such as their proposed Aussie Browse LNG? And now has selected a NW BC site for an LNG terminal?

Or why future `brownfield` LNG in Australia - that is, addition of liquefaction trains to existing Aussie LNG terminals - has also been abandoned by all other LNG global players in Australia?

3. Africa is an LNG producer yet much of Africa does not have any infrastructure, regulatory and legal framework (Tanzania and Mozambique), unskilled workforce, and is quite corrupt frankly. $Billions must be spent within unstable African regimes. Would you?

BG Group now does not have the NG feed-stock for its Egyptian LNG terminal. They are losing their shirts on that project.

Other global LNG giants in Africa continuously declare force majeure due to pipeline bombings, etc. Another witnessed an embargo of LNG tankers due to basically blackmail, for a week, for roughly $1 billion by a Nigerian Port Authority even when the national gov`t oil company was part of the LNG consortium and that payment was not required.

Another recently opened LNG terminal in Africa now needs to be shut-down for one year due to shoddy workmanship through-out its entire system.

And that leaves us with the U.S Gulf Coast. Over one year ago, the head of Petronas told the Globe and Mail newspaper that LNG sourced from BC would be much cheaper. Seems he was right. Many Asian LNG purchasers, inclusive of the Japanese, of U.S Gulf coast LNG supplies seem to have now come to the same conclusion as Petronas. They are now backing off and attempting to sub-contract thier long-term LNG supplies to third parties.

Why? Well they also initially thought that U.S. Gulf Coast LNG supplies were the cheapest in the world and would be the proverbial `Cat`s Meow`. Not so now. Unlike the BC and Australian integrated LNG model with global LNG giants, U.S. Gulf Coast LNG terminals are not operated by global LNG giants, have expensive hedge fund financing, and utilize the `tolling` LNG model.

The tolling LNG model, from an LNG purchaser`s veiwpoint, can be quite risky. Why? Because they are tied to the Henry Hub NG price and Henry Hub spiked last winter to roughly $6+ MMBTu. Much more above that and U.S. Gulf Coast begins to become cost uncompetitive v BC. BTW, Henry Hub spiked to $13 MMBtu during Hurricane Katrina.

Add on to that, LNG purchaser`s requirement to charter LNG tankers to pick-up same from the U.S. Gulf Coast, a large Panama Canal fee, new Panama Canal unable to handle larger Q-Flex and Q-Max LNG tankers, 10 days+ additional sailing time and cost to Asia compared to BC, 5% LNG burn-off during said transit... and you get the picture.

Also remember that LNG purchasers prefer the most stable and risk-free LNG seller at the end of the day. They also want diversity of supply to further reduce risk. So, jawagord, based upon the foregoing, as a potential risk-averse Asian LNG purchaser, would you purchase from Qatar? Australia? Africa? U.S Gulf Coast? or BC? (Might as well forget about Russia for a whole host of other reasons altogether)

PS. By the looks of it, the global LNG majors seem to have placed their bets on BC.

So what you have said is those FN that have land treaties in place have all signed on to NG pipeline and all those FN without treaties have not signed on And it's not about land??? Sorry not buying the bitumen spill argument. We'll see over the next couple of years how it all plays out.

Regarding the LNG question, if I was buying for the next 5 years I would be forced to buy from an existing producer or from one of the under construction plants. What I know is once the over budget "Aussies" plants go into operation the sunk capital costs won't matter much, it will be about operating costs, and they will be low cost operators, close to the market. When Japan restarts their nuclear reactors What happens to the LNG market? As a consumer company I would want to know which one or two BC projects will get built, when will they get built, what price would I be paying, can anyone answer? Your Asian customers want the lowest price linked to NA gas prices, BC wants to sell LNG at prices linked to world oil/diesel prices. Hard to make a deal when the government hasn't set the tax rate, hard to cost your plant and pipeline when the environmental regs are not settled.

craneSpotter Sep 30, 2014 6:42 PM

Hmmm, interesting info.

Petronas cites environmental concerns on Prince Rupert LNG project

VICTORIA — The Globe and Mail - Sep 29, 2014 (link)

Quote:

While Mr. Shamsul complained to the Financial Times that Canada’s efforts to attract LNG investment are plagued by “uncertainty, delay and short vision,” B.C. government officials confirm it was the LNG company that requested a time extension of the environmental review process that will determine whether the project can proceed.

Pacific NorthWest LNG asked for more time to work out modifications in the jetty and terminal design at Lelu Island to include “substantial” mitigation measures to avoid and reduce potential adverse effects to the marine habitat, a B.C. Environment Ministry official said...

...The federal assessment is being conducted jointly with the B.C. Environmental Assessment Agency.

The project cannot move forward unless both levels of government each grant an environmental certificate. The company asked for an additional 45 days to respond to the concerns raised by the federal agency, which means the final decision may not be reached until Dec. 20.


craneSpotter Oct 6, 2014 4:33 PM

Petronas says 'consensus' on B.C. LNG terms in next few weeks is 'critical'

Vancouver Sun - Oct 6, 2014

Quote:

Petronas says its multibillion-dollar investment in B.C. liquefied natural gas could be delayed by at least a decade unless it can "secure consensus" with its government counterparts by the end of October...

...He says his company was "encouraged" by discussions it had last week with Premier Christy Clark and Natural Gas Development Minister Rich Coleman.

He also says Petronas will continue to work with Ottawa and federal agencies on ways to advance the regulatory process and clarify the fiscal framework.



Read more: http://www.vancouversun.com/business...#ixzz3FNpPlkr1


craneSpotter Oct 6, 2014 7:44 PM

Certainly related to LNG, as well as gas liquids.

Construction underway on massive 2,500-person work camp in Peace Region

Alaska Highway News - Oct 6, 2014

http://www.timescolonist.com/busines...gion-1.1415625

Quote:

Encana recently started work on the Sunset Prairie Lodge, a camp roughly 55 kilometres from Dawson Creek that could eventually host up to 2,500 people working on the company’s Montney shale natural gas projects....Encana expects to invest $1 billion in its Montney holdings in the next year.
...

craneSpotter Oct 8, 2014 6:06 AM

LOL...the Petronas saga continues...

Petronas designs bridge to bypass habitats

G&M - Vancouver - October 7, 2014

http://www.theglobeandmail.com/repor...ticle20974636/

Quote:

While Petronas threatens to walk away from its B.C. liquefied natural gas venture if it doesn’t get its way, the Malaysian energy giant is taking extraordinary steps to dig in for the long term by designing a 1.6-kilometre long suspension bridge to minimize the project’s environmental impact.

Kuala Lumpur-based Petronas is hoping that the engineering feat will help save its $11-billion liquefied natural gas project, which is facing crunch time during an environmental review [CEAA is lead regulator]. The state-owned company is devising plans to build a suspension bridge to ensure its LNG operations near Prince Rupert in northwestern British Columbia won’t interfere with habitat for fish and marine mammals.

The suspension bridge design is the major change contained in a new 64-page engineering report aimed at persuading environmental regulators to approve the Petronas-led Pacific NorthWest LNG joint venture. Pacific NorthWest LNG sent the report to regulators late Monday, just hours after Petronas chief executive officer Shamsul Azhar Abbas warned that the B.C. project is in danger of being shelved for up to 15 years unless tax and regulatory issues are resolved by Oct. 31.

The $11-billion allotted for the export terminal on Lelu Island is part of a $36-billion budget that includes a B.C. pipeline and drilling in the province’s northeast....

...By contrast, designs for BG Group PLC’s rival Prince Rupert LNG project won’t need any suspension bridge to be built from Ridley Island, meaning BG Group would have a much shorter distance from its LNG storage facilities to the berths for Asia-bound tankers.


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